Changes to emissions trading system will 'derail' green steel production, says Eurofer

The letter claims that European legislators are now considering proposals on the EU’s ETS, and the carbon border adjustment mechanism (CBAM) that ‘undermine’ EUROFER’S capacity to ‘invest in these projects and derails the transition to green steel production in Europe.’

In Europe, new allocation rules will reduce the main CO₂ benchmark by around 40%, Eurofer says.

The letter reads: ‘The proposals weaken carbon-leakage protection of our industry in the domestic and global markets, favouring international competitors which are not subject to equivalent carbon costs. In Europe, new allocation rules will suddenly reduce the main CO₂ benchmark by around 40% — because of one plant that was previously not in the scope — and set a value which no company can achieve in just three years. This is due to a premature transition from the free allocation and indirect cost compensation system to a CBAM which has not yet been tested. Circumvention and resource shuffling are only a few of the many risks that could undermine the CBAM’s effectiveness. Moreover, the CBAM does not yet foresee any measure to preserve the EU’s 20 Mt of steel exports per year, worth €45 billion, and the 30,000 jobs that are directly dependent on these.’

Eurofer has called on the European Parliament and council to ‘immediately’ address its concerns by avoiding ‘further scaling back existing carbon-leakage protection until the CBAM has proven its effectiveness and a solution for exports is in place’, and ‘preventing a sharp decrease in free allocation for existing steel plants which would result from a modification of the benchmark scope.’

Instead, the association says, ‘low-carbon technologies must be rewarded without reducing prematurely benchmark values, at least in the first years when such technologies are introduced at an industrial scale.’